Lakota Freight Co.
Unadjusted Trial Balance
March 31, 2014
Debit
Balances
Credit
Balances
11 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
13 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
14 Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600
16 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
17 Accumulated Depreciation—Equipment . . . . . . . . . . . . . . . . . . . . . . . . 25,000
18 Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
19 Accumulated Depreciation—Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
21 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
31 Kaya Tarango, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,000
32 Kaya Tarango, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
41 Service Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
51 Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000
53 Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,600
54 Truck Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
59 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
300,000 300,000
The data needed to determine year-end adjustments are as follows:
a. Supplies on hand at March 31 are $7,500.
b. Insurance premiums expired during year are $1,800.
c. Depreciation of equipment during year is $8,350.
d. Depreciation of trucks during year is $6,200.
e. Wages accrued but not paid at March 31 are $600.
Instructions
1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column.
2. (Optional.) Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet. Add the accounts listed in part (3) as needed.
3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.’s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation Expense—Equipment, 55; Depreciation Expense— Trucks, 56; Insurance Expense, 57.
4. Prepare an adjusted trial balance.
5. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.
7. Prepare a post-closing trial balance.
Answer:
1., 3., and 6.
Account: Cash Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 12,000
Account: Supplies Account No. 13
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 30,000
31 Adjusting 26 22,500 7,500
Account: Prepaid Insurance Account No. 14
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 3,600
31 Adjusting 26 1,800 1,800
Account: Equipment Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 110,000
Account: Accumulated Depreciation—Equipment Account No. 17
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 25,000
31 Adjusting 26 8,350 33,350
Account: Trucks Account No. 18
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 60,000
Account: Accumulated Depreciation—Trucks Account No. 19
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 15,000
31 Adjusting 26 6,200 21,200
Account: Accounts Payable Account No. 21
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 4,000
Account: Wages Payable Account No. 22
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Adjusting 26 600 600
Account: Kaya Tarango, Capital Account No. 31
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 96,000
31 Closing 27 51,150 147,150
31 Closing 27 15,000 132,150
Account: Kaya Tarango, Drawing Account No. 32
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 15,000
31 Closing 27 15,000 — —
Account: Income Summary Account No. 33
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Closing 27 160,000 160,000
31 Closing 27 108,850 51,150
31 Closing 27 51,150 — —
Account: Service Revenue Account No. 41
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 160,000
31 Closing 27 160,000 — —
Account: Wages Expense Account No. 51
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 45,000
31 Adjusting 26 600 45,600
31 Closing 27 45,600 — —
Account: Supplies Expense Account No. 52
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Adjusting 26 22,500 22,500
31 Closing 27 22,500 — —
Account: Rent Expense Account No. 53
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 10,600
31 Closing 27 10,600 — —
Account: Truck Expense Account No. 54
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014Mar. 31 Balance √ 9,000
31 Closing 27 9,000 — —
Account: Depreciation Expense—Equipment Account No. 55
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Adjusting 26 8,350 8,350
31 Closing 27 8,350 — —
Account: Depreciation Expense—Trucks Account No. 56
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Adjusting 26 6,200 6,200
31 Closing 27 6,200 — —
Account: Insurance Expense Account No. 57
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Adjusting 26 1,800 1,800
31 Closing 27 1,800 — —
Account: Miscellaneous Expense Account No. 59
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Mar. 31 Balance √ 4,800
31 Closing 27 4,800 — —
2. Optional (Appendix)
LAKOTA FREIGHT CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended March 31, 2014
Account Title
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 12,000 12,000 12,000
Supplies 30,000 (a) 22,500 7,500 7,500
Prepaid Insurance 3,600 (b) 1,800 1,800 1,800
Equipment 110,000 110,000 110,000
Accum. Depr.—Equip. 25,000 (c) 8,350 33,350 33,350
Trucks 60,000 60,000 60,000
Accum. Depr.—Trucks 15,000 (d) 6,200 21,200 21,200
Accounts Payable 4,000 4,000 4,000
Wages Payable (e) 600 600 600
Kaya Tarango, Capital 96,000 96,000 96,000
Kaya Tarango, Drawing 15,000 15,000 15,000
Service Revenue 160,000 160,000 160,000
Wages Expense 45,000 (e) 600 45,600 45,600
Supplies Expense (a) 22,500 22,500 22,500
Rent Expense 10,600 10,600 10,600
Truck Expense 9,000 9,000 9,000
Depr. Exp.—Equipment (c) 8,350 8,350 8,350
Depr. Exp.—Trucks (d) 6,200 6,200 6,200
Insurance Expense (b) 1,800 1,800 1,800
Miscellaneous Expense 4,800 4,800 4,800
300,000 300,000 39,450 39,450 315,150 315,150 108,850 160,000 206,300 155,150
Net income 51,150 51,150
160,000 160,000 206,300 206,300
3. JOURNAL Page 26
Date
Post.
Ref. Debit Credit
2014 Adjusting Entries
Mar. 31 Supplies Expense 52 22,500
Supplies 13 22,500
Supplies used ($30,000 – $7,500).
31 Insurance Expense 57 1,800
Prepaid Insurance 14 1,800
Insurance expired.
31 Depreciation Expense—Equipment 55 8,350
Accumulated Depr.—Equipment 17 8,350
Equipment depreciation.
31 Depreciation Expense—Trucks 56 6,200
Accumulated Depr.—Trucks 19 6,200
Truck depreciation.
31 Wages Expense 51 600
Wages Payable 22 600
Accrued wages.
LAKOTA FREIGHT CO.
Adjusted Trial Balance
March 31, 2014
Debit
Balances
Credit
Balances
Cash 12,000
Supplies 7,500
Prepaid Insurance 1,800
Equipment 110,000
Accumulated Depreciation—Equipment 33,350
Trucks 60,000
Accumulated Depreciation—Trucks 21,200
Accounts Payable 4,000
Wages Payable 600
Kaya Tarango, Capital 96,000
Kaya Tarango, Drawing 15,000
Service Revenue 160,000
Wages Expense 45,600
Supplies Expense 22,500
Rent Expense 10,600
Truck Expense 9,000
Depreciation Expense—Equipment 8,350
Depreciation Expense—Trucks 6,200
Insurance Expense 1,800
Miscellaneous Expense 4,800
315,150 315,150
5. LAKOTA FREIGHT CO.
Income Statement
For the Year Ended March 31, 2014
Service revenue $160,000
Expenses:
Wages expense $45,600
Supplies expense 22,500
Rent expense 10,600
Truck expense 9,000
Depreciation expense—equipment 8,350
Depreciation expense—trucks 6,200
Insurance expense 1,800
Miscellaneous expense 4,800
Total expenses 108,850
Net income $ 51,150
LAKOTA FREIGHT CO.
Statement of Owner’s Equity
For the Year Ended March 31, 2014
Kaya Tarango, capital, April 1, 2013 $ 96,000
Net income for the year $51,150
Less withdrawals 15,000
Increase in owner’s equity 36,150
Kaya Tarango, capital, March 31, 2014 $132,150
LAKOTA FREIGHT CO.
Balance Sheet
March 31, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $12,000 Accounts payable $4,000
Supplies 7,500 Wages payable 600
Prepaid insurance 1,800 Total liabilities $ 4,600
Total current assets $ 21,300
Property, plant, and equipment:
Equipment $110,000 Owner’s Equity
Less accum. depreciation 33,350 $76,650 Kaya Tarango, capital 132,150
Trucks $ 60,000
Less accum. depreciation 21,200 38,800
Total property, plant, and
equipment 115,450 Total liabilities and owner’s
Total assets $136,750 equity $136,750
6. JOURNAL Page 27
Date
Post.
Ref. Debit Credit
2014 Closing Entries
Mar. 31 Service Revenue 41 160,000
Income Summary 33 160,000
31 Income Summary 33 108,850
Wages Expense 51 45,600
Supplies Expense 52 22,500
Rent Expense 53 10,600
Truck Expense 54 9,000
Depreciation Expense—Equipment 55 8,350
Depreciation Expense—Trucks 56 6,200
Insurance Expense 57 1,800
Miscellaneous Expense 59 4,800
31 Income Summary 33 51,150
Kaya Tarango, Capital 31 51,150
31 Kaya Tarango, Capital 31 15,000
Kaya Tarango, Drawing 32 15,000
7.
LAKOTA FREIGHT CO.
Post-Closing Trial Balance
March 31, 2014
Debit
Balances
Credit
Balances
Cash 12,000
Supplies 7,500
Prepaid Insurance 1,800
Equipment 110,000
Accumulated Depreciation—Equipment 33,350
Trucks 60,000
Accumulated Depreciation—Trucks 21,200
Accounts Payable 4,000
Wages Payable 600
Kaya Tarango, Capital 132,150
191,300 191,300